The  Relation  of  American  Railroads 
to  Development  of  Foreign  Trade 


An  Address 

Before  the 

Third  National  Foreign  Trade  Convention 
at  New  Orleans,  Louisiana 


January  28,  1916 


By 

FAIRFAX  HARRISON 

President,  Southern  Railway  Company 


Digitized  by  the  Internet  Archive 
in  2015 


https://archive.org/details/relationofamericOOharr 


16  1932 

f*  9*^ 


THE  RELATION  OF  AMERICAN  RAILROADS  TO  DE- 
VELOPMENT OF  FOREIGN  TRADE. 

Whether  the  relation  of  the  American  railroads  to  foreign  trade  after 
the  European  war  is  to  be  substantially  different  from  that  which  it 
was  before,  and  has  been  during,  the  war  depends  upon  substantial 
progress  in  the  development  of  American  policy  with  respect  to  export 
trade  generally.  The  present  limited  question  is  then  very  little  more 
or  less  than  the  general  question  to  which  this  Foreign  Trade  Conven- 
tion is  addressing  itself.  To  enable  the  railroads  to  be  of  the  largest 
co-operative  service  in  the  development  of  foreign  trade  there  must 
be  progressive  modifications  of  pre-existing  practices  in  the  relations 
of  the  railroads  and  the  ports,  some  of  which  I shall  endeavor  to  indicate 
as  I see  them. 

The  elemental  function  of  a railroad — to  facilitate  the  exchange  of 
commodities  between  more  or  less  widely  separated  communities — is 
not  affected  by  the  destination,  whether  it  be  domestic  or  foreign.  In 
this  respect  the  relation  of  our  railroads  to  the  commerce  of  the  nation 
is  not  different  now  from  what  it  has  been  in  the  past  or  relatively  from 
what  it  may  be  in  the  future.  But  foreign  commerce  requires  of  a 
railroad  more  than  its  elemental  function. 

In  the  movement  of  all  export  commerce  from  the  United  States, 
except  that  carried  by  land  into  Canada  and  Mexico,  there  are  three 
distinct  units  of  service : first,  the  movement  from  the  point  of  origin 
to  the  tide-water  terminal ; second,  the  handling  from  the  cars  either 
direct  or  through  a storage  warehouse  to  the  ocean  carrier;  and,  third, 
the  ocean  carriage  to  the  foreign  port.  These  units  of  transportation 
enter  into  the  handling  of  import  traffic  in  the  reverse  order.  Of  the 
three,  inland  transportation  alone  is  the  function  of  the  railroad.  The 
handling  of  goods  at  the  port  and  their  transfer  to  and  from  ocean 
vessels  are  entirely  separate  functions  which  may,  and  in  my  judgment 
should,  properly  be  performed  by  a separate  agency. 

Generally  speaking,  in  this  country  facilities  at  the  ports  for  the 
interchange  of  export  and  import  traffic  have  been  provided  by  the  rail- 
roads themselves.  In  numerous  cases  several  railroads  serving  a single 
port  have  each  provided  independent  water-front  terminals  and  railroads 
serving  more  than  one  port  have  provided  separate  facilities  for  each 
port  served,  thus  involving  large  investments  of  capital  for  which  there 
has  been  no  adequate  return  because  competition  has  to  a considerable 
extent  required  the  absorption  of  terminal  costs  as  a practical  deduction 
from  the  normal  inland  transportation  charges,  and,  further,  because 
the  business  is  divided  between  too  many  ports  and  between  too  many 
separately  owned  and  operated  terminals. 

Such  conditions  are  economically  unsound  and  must  come  to  an  end 


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if  economy  of  transportation  is,  in  a national  sense,  to  be  a factor  in 
the  increase  of  the  volume  of  our  export  and  import  traffic. 

Let  us  hope  that  our  foreign  commerce  may  in  time  grow  until 
there  is  real  need  of  all  the  ports  with  which  nature  has  blessed  the  long 
coast  line  of  the  United  States,  but  in  converting  that  hope  into  terms 
of  actual  life  we  may  as  well  realize  that  a large  number  of  insufficiently 
equipped  ports  is  not  as  efficient  a factor  in  the  development  of  com- 
merce at  the  stage  we  have  now  reached  as  would  be  a few  sectionally 
representative  ports,  thoroughly  well  equipped.  If  this  view  shall  obtain 
there  is  in  prospect  an  increasingly  fierce  competition  between  individual 
ports  for  this  position  of  sectional  representation.  On  past  experience 
we  may  expect  the  railroads  to  be  in  the  vortex  of  this  controversy.  It 
may  be  settled  by  the  biological  law  of  the  survival  of  the  fittest  or  it  may 
be  settled  by  the  modern  panacea  for  business  ills,  a statute ; but  in  any 
event  the  best  interests  of  our  foreign  trade  will  be  in  abeyance  until  it  is 
settled.  It  is  today  a fashion  to  consider  German  practice  in  all  consider- 
ations of  efficiency.  There  may  be  more  than  an  illustration  of  my  point  in 
the  fact  that  the  nation  which  has  in  recent  years  made  the  largest  deliber- 
ate increase  of  its  foreign  commerce  has  concentrated  on  two  well 
equipped  ports.  It  is  probable  that  in  this  respect  Germany’s  transporta- 
tion costs  must  have  been  benefited  from  the  operation  of  the  economic 
law  that  concentration  of  volume,  short  of  congestion,  reduces  costs  units. 

The  development  of  the  seaports  of  the  United  States  and  especially 
that  of  the  South  Atlantic  and  Gulf  ports,  in  relation  to  the  railroads, 
has  had  its  own  peculiar  history.  Today,  when  in  the  matter  of  rail 
transportation  the  political  theory  of  “equal  opportunity  for  all,  special 
privileges  to  none”  is  having  what  is  perhaps  a too  literal 
application,  because  it  is  often  in  the  teeth  of  the  natural 
laws  of  trade,  the  rational  explanation  of  the  partial  and  in- 
complete development  of  some  of  our  seaports  is  forgotten  and  the 
attempt  is  made  to  explain  it  by  diabolical  design.  When  the  first  rail- 
roads were  built  from  the  sea  to  the  interior,  they  were  comparatively 
small  and  always  weak  units.  At  the  beginning  they  were  economic 
monopolies  and  controlled  all  the  traffic  of  a territory,  insufficient  though 
that  may  have  been.  As  the  railroad  system  was  linked  up  and  com- 
petition began  between  ports  and  between  rival  producing  territories, 
the  management  of  each  local  line  which  reached  a port,  actuated  by 
the  usual  resource  of  the  weak  in  dealing  with  a strong  and  impetuous 
force  such  as  moves  competitive  commerce,  exercised  every  effort  of  in- 
genuity to  discriminate  in  transportation  practices  and  charges  in  favor 
of  its  single  port,  thereby  seeking  desperately  to  maintain  and  to  increase 
the  volume  of  traffic  of  which  it  formerly  had  a monopoly.  This  was 
the  only  interest  of  the  original  seaboard  rail  lines ; duty  to  the  shippers  of 
the  entire  United  States  was  not  yet  considered : the  golden  rule  was  in 
abeyance  so  far  as  the  early  railroads  were  concerned.  When  it  came 


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to  pass  that  rail  transportation  swallowed  all  other  forms  of  inland 
transportation,  as  the  lean  kine  swallowed  the'  fat  kine  in  Pharaoh’s 
dream,  and  the  shipper  whatever  his  location  no  longer  depended  upon  any 
single  railroad  or  any  single  seaport,  the  franchises  or  what  local  philoso- 
phers still  claim  to  be  the  absolute  rights  of  particular  ports  in  respect  of 
certain  traffic  were  thus  transmuted  into  competitive  opportunities.  It 
followed  that  discrimination  in  favor  of  the  individual  port  has  gradually 
been  withdrawn  by  the  railroad,  not  from  any  change  of  heart  nor  even 
from  any  lack  of  good-will,  but  as  a consequence  of  economic  pressure. 
This  consequence  of  the  development  of  transportation  in  a national  sense 
seems  to  have  proven  an  apparent  atrophy  to  the  commercial  enterprise 
of  some  of  the  seaboard  communities  affected.  They  had  come  to  depend 
altogether  upon  the  railroad  for  their  commercial  pabulum : they  had 
looked  to  the  railroad  to  supply  not  only  the  transportation  and  the  ter- 
minals, but  the  traffic  as  well,  and  when  in  time  the  discrimination  in 
their  favor  was  removed,  partly  by  the  working  of  an  economic  law  and 
partly  by  the  fixed  and  inelastic  methods  which  have,  in  the  past,  been 
nationally  characteristic  of  our  public  regulation  of  railroad  practices, 
it  has  resulted  that  some  seaport  communities  have  exercised  more  energy 
in  asserting  claims  to  assumed  natural  rights  and  in  prosecuting  charges 
that  the  railroad  has  discriminated  against  them,  with  evil  intent,  than 
in  adjusting,  as  the  railroads  have  done,  their  practice  to  new  economic 
conditions.  Straight  thinking  on  this  question,  in  large  terms,  is  necessary 
for  that  commercial  health  in  which  alone  the  opportunity  of  a seaport 
for  foreign  commerce  may  be  realized.  The  ports  which  would  keep  up 
with  the  procession  and  become  what  President  Wilson  has  called 
Masters  of  Competitive  Supremacy,  must  do  something  in  their  own  in- 
terest, apart  from  the  railroads,  or  drop  out  of  the  race.  If  they  act, 
rather  than  wait  and  bewail,  they  will  find  the  railroads  quick  and  eager 
to  do  their  share.  A man  and  a milch  cow  may  technically  speaking 
be  a team,  but  popular  usage  interprets  the  term  as  two  or  more  ener- 
getic units  which  pull  together. 

Export  commerce  will  always  seek  the  line  of  least  resistance.  It 
will  go  to  the  point  where  the  service  is  best,  storage  facilities  are  most 
readily  accessible  and  most  of  all  where  there  are  ships.  To  bring  the 
ships  the  successful  port  seeks  above  all  to  develop  its  import  traffic 
and  its  banking  facilities.  Next  in  importance,  and  here  I come  back 
directly  to  my  subject,  the  port  itself  should  provide  terminal  facilities 
for  the  exchange  of  tonnage  between  rail  and  water  carriers.  My  own 
view  is  that  the  demands  on  the  railroads  in  the  future  in  respect  of 
inland  transportation  are  going  to  be  at  least  equal  to  the  rates  which 
the  public  will  allow  for  rail  service,  and  that  the  seaport  must  hereafter 
look  elsewhere  than  to  the  railroads  to  provide,  or  even  to  pay  for  the 
use  of,  water  terminals. 

Seaport  communities  desiring  to  participate  in  the  benefits  of  for- 


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eign  commerce  and  to  obtain  a competitive  advantage  over  othei'  avail-  | 
able  ports  should  then,  I maintain,  provide  the  necessary  terminal  facili- 
ties either  through  municipal  ownership  or  through  local  terminal  com- 
panies supported  by  local  interest  and  thus  undertake  the  responsibility  of 
supplying  facilities  without  discrimination  for  all  ships  and  all  railroads 
reaching  the  port ; and  further  they  should  impose  charges  upon  the 
traffic,  rather  than  upon  the  railroad,  sufficient  to  make  the  terminal  self-  1 
supporting.  In  competition  with  rival  ports  they  may  have  to  bear  in  the 
form  of  local  taxes  or  otherwise  locally  so  much  of  the  terminal  cost 
as  may  be  necessary  to  attract  and  hold  competitive  traffic  which  is  free  to 
seek  any  one  of  several  ports.  New  Orleans  has  taken  a step  in  this  di- 
rection through  its  public  ownership  of  docks  and  through  the  wise  policy 
of  the  Dock  Board  in  undertaking  to  have  uniform  charges  established  j! 
for  service  performed  at  the  city  docks  and  at  those  provided  by  the 
railroad  and  the  railroad-owned  terminal  companies. 

When  this  point  has  been  made  clear  as  a principle  of  sound  growth, 
it  may  be  added  that,  while  the  obligations  of  a railroad  as  a common  |i 
carrier  are  not  different  with  respect  to  foreign  commerce  than  with  { 
respect  to  domestic  commerce,  the  policies  of  a railroad  need  not  neces-  | 
sarily  be  limited  altogether  by  its  obligations.  They  never  have  been  in  j; 
the  past  and  will  not  be  in  the  future.  , The  railroad,  so  long  as  it  is  a |i 
function  of  private  endeavor,  properly  may  and  always  will  consider  its  J 
interests  as  a business  enterprise.  Because  prosperous  communities 
along  its  lines  bring  increased  traffic  to  the  railroad,  the  alert  manage- 
ment is  vitally  interested  in  the  development  of  the  territory  which  it  | 
serves  and  in  helping  the  producers  in  that  territory  to  find  profitable 
markets  either  at  home  or  abroad.  As  a large  proportion  of  the  products 
of  the  United  States,  either  as  raw  materials  or  manufactured  commodi- 
ties, find,  or,  more  strictly  speaking,  after  domestic  needs  have  been  met, 
ought  to  find,  markets  in  foreign  countries,  the  carriage  of  these  products 
to  the  seaports  make  up  such  a large  part  of  the  business  of  the  railroads 
that  they  may  properly  so  shape  their  policies  as  to  encourage  this 
business.  This  many  railroads  have  done,  and  perhaps,  as  affects  their 
own  interest,  have  in  the  past  overdone. 

So  long  as  we  have  a surplus  of  cotton,  of  coal,  of  grain  and  its 
products,  and  of  lumber,  with  a vacuum  of  such  articles  in  other  parts 
of  the  world,  the  people  who  need  those  commodities  will  seek  them  here. 
We  may  not,  however,  assume  that,  because  foreign  countries  do  buy  of 
us,  we  have  a natural  and  inexpugnable  monopoly  in  supplying  them, 
even  when  they  are  less  fortunate  than  ourselves  with  respect  even  to 
those  commodities  of  which  we  have  a surplus.  The  facts  “jump  in  our 
eves,”  as  the  French  say.  Great  Britain  exports  more  coal  than  does  the 
United  States ; Russia  has  a great  surplus  of  wheat ; Argentina,  with 
constantly  increasing  areas  of  cultivation,  finds  a ready  market  for  its 
surplus  grain  in  those  countries  which  also  buy  from  us  and  which  are 


5 


eager  to  supply  the  needs  of  Argentina  for  every  kind  of  manufacture 
which  that  country  may  require,  including  the  manufactures  of  cotton. 
England  is  earnestly  stimulating  the  growing  of  cotton  in  Egypt  and  in 
India.  Germany  is  ambitious  of  economic  independence  in  respect  of  raw 
cotton,  and  is  looking  forward  to  the  possibility  of  growing  cotton  under 
"her  own  dominion,  by  the  waters  of  Babylon.  All  such  competition  with  our 
cotton  has  as  yet  been  negligible,  but  who  will  dare  say  what  the  future 
has  in  store  when  there  is  such  a stimulus  for  success. 

Prior  to  the  war  Germany  exported  cotton  goods  alone  to  the  value 
of  more  than  $110,000,000  annually,  securing  the  raw  material  mainly 
in  this  country  and  selling  manufactures  thereof  even  at  our  own  doors. 

Therefore,  with  respect  to  any  articles  of  commerce  which  may  be 
obtained  elsewhere,  we  must  not  only  offer  an  article  at  least  as  good  in 
quality,  as  attractive  in  other  respects  and  at  prices  as  low  as  those 
offered  by  our  competitors  in  other  countries,  but  we  must  also  vigorously 
go  after  the  business  and  in  all  respects  meet  the  effort  of  our  com- 
petitors. 

The  war  has  temporarily  removed  from  the  field  of  competition  some 
of  our  strongest  competitors  for  world  trade.  It  has  curtailed  the  ability 
of  others  to  maintain  the  volume  of  their  foreign  trade  and  has,  tempo- 
rarily at  least,  increased  our  opportunity  in  the  foreign  field.  Never- 
theless the  plain  fact  is,  that,  aside  from  the  sale  of  munitions  and  sup- 
plies to  the  belligerents  themselves  and  despite  the  largest  public  dis- 
cussion and  advertisement  of  the  subject  during  the  past  eighteen  months, 
we  can  not  yet  say  that,  in  any  large  way,  have  we  availed  ourselves  of 
the  opportunity  to  increase  a permanent  and  enduring  trade  with  neutral 
countries.  Whatever  may  be  the  explanation,  the  fact  remains,  we  have 
not  yet  taken  substantial  advantage  of  an  opportunity  which  diminishes 
every  month  as  the  war  in  Europe  nears  its  term.  It  is  an  application  of 
the  old  fable  of  the  books  of  the  Sibyl : we  may  expect  to  pay  as  much 
for  half  as  might  have  sufficed  to  buy  the  whole. 

This  failure  is  doubtless  due  in  good  part  to  the  fact  that  so  much  of 
our  energy  is  employed  in  the  production  of  the  very  large  volume  of  busi- 
ness destined  to  the  warring  nations,  but  in  that  fact  there  is  still  ground 
for  hope.  With  the  cessation  of  the  war  this  productive  energy  will  be  re- 
leased, and  it  remains  the  duty  of  those  who  claim  prevision  of  commercial 
opportunity  to  be  looking  to  its  employment  in  other  directions.  It  should 
be  the  purpose  of  every  patriotic  American  that  a substantial  part  of  that 
energy  should  be  devoted  to  the  manufacture  and  exportation  of  articles 
which  may  find  markets  abroad.  Especially  is  this  true  for  the  reason  that 
by  developing  a steady  foreign  trade  we  insure  to  our  manufacturers  a 
very  present  help  in  times  of  depression  at  home  in  the  form  of  a con- 
stant revenue  from  sources  unaffected  by  economic  conditions  which 
may  temporarily  diminish  business  profits  in  the  United  States.  As  a 
practical  illustration  of  this  which  may  come  home  to  us  here  in  the 


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South,  I may  refer  to  the  fact  that  when,  on  the  outbreak  of  the  European 
war,  the  cotton  market  collapsed  and  business  was  profoundly  depressed 
throughout  the  South,  Chattanooga  felt  the  depression  relatively  less 
than  other  Southern  cities  because  her  manufacturers  were  then  and 
ever  since  have  been'  selling  goods  in  the  markets  of  every  continent  and 
of  all  the  islands  of  the  seven  seas. 

At  the  close  of  the  war  our  merchants  and  manufacturers  will  find 
their  European  competitors  in  every  field,  not  only  endeavoring  to  get 
any  new  business  that  may  offer,  but  also  striving  to  wrest  fromi American 
concerns  the  business  they  have  developed  during  the  war.  It  will  be 
no  ladylike  competition,  for  we  must  face  the  fact  that  despite  our 
philanthropies  and  our  charities  one  of  the  results  of  this  war  will  be  to 
make  the  American  business  man  not  only  a rival,  but  a hated  rival,  of 
all  the  nations  now  engaged  in  war.  Even  those  who  have  profited  by 
their  control  of  the  sea  to  buy  munitions  of  us  envy  us  today  and  show 
evidence  that  they  are  prepared  to  hate  us  as  soon  as  it  shall  no  longer  be 
expedient  to  be  polite.  We  may  agree  with  Adam  Smith  that  competitive 
trade  is  not  war,  but  every  experienced  man  rcognizes  that  it  is  no  school 
for  the  inculcation  of  dancing  school  manners.  In  actual  life  men  love 
and  hate  where  their  interest  lies. 

The  time,  therefore,  to  work  for  permanent  export  business  after  the 
war  is  now, — not  tomorrow  morning,  but  tonight. 

One  of  our  strongest  and  most  aggressive  competitors  in  the  future, 
as  in  the  past,  will  be  Germany.  It  suffices  to  repeat — like  old  Cato’s 
warning  “Carthage  must  be  destroyed”  we  can  never  say  it  too  often — 
the  value  of  German  annual  exports  (including  precious  metals)  in- 
creased in  33  years  to  the  extent  of  more  than  $836,000,000.  That 
country,  where  the  fostering  of  foreign  trade  has  been  secondary  only 
to  the  creation  of  the  wonderful  military  machine  of  the  Empire,  has  in 
comparatively  recent  years,  made  greater  strides  in  the  development  of 
manufacturing  industries  and  in  the  exportation  of  their  products  than 
has  any  other  nation.  This  has  been  accomplished  in  no  small  measure 
by  a system  of  governmental  stimulus  which  threw  wide  open  to  foreign 
trade  the  government  owned  railroads  and  terminals,  which  subsidized 
steamship  lines  and  permitted  the  payment  by  manufacturing  syndicates 
of  premiums  on  exports. 

It  may  not  be  amiss,  as  I am  speaking  primarily  of  transportation, 
to  call  attention  to  the  fact  that  while  the  value  of  Germany’s  imports  has 
exceeded  the  value  of  her  exports,  the  tonnage  was  fairly  balanced,  and 
this,  as  every  transportation  man  knows,  is  a very  essential  thing  if  the 
best  results  are  to  be  obtained  as  to  transportation  costs.  In  this  illustra- 
tion there  is,  as  I see  the  problem,  one  of  the  most  important  elements  of 
a successful  foreign  trade.  It  is  at  the  basis  not  only  of  practical  econ- 
omy, but  of  economic  law.  We  may  not,  if  we  expect  to  be  successful  in 
our  efforts  to  build  up  a world  commerce,  confine  our  efforts  to  exporta- 


7 


tion.  We  must  furnish  a market  for  the  things  which  our  customers  have 
to  sell,  particularly  raw  materials,  if  we  expect  them  to  prefer  our  goods 
to  those  of  our  competitors.  During  the  past  eighteen  months  we  have 
heard  much  of  the  opportunity  for  American  exports,  but  not  enough  of 
the  obligation  in  respect  of  corresponding  imports  which  a true  foreign 
trade  imposes.  The  problem  of  foreign  exchange  has  brought  this  home 
to  our  international  bankers  and  they  are  now  sounding  the  warning 
in  clarion  tones. 

Coming  back  again  to  the  question  of  railway  transportation  and 
•attempting  to  formulate  some  of  the  things  which  the  American  railways 
should  be  enabled  to  do  to  promote  foreign  trade,  I turn  once  more  to 
the  example  of  Germany.  I do  not  propose  government  subsidies,  but 
the  opportunity  to  follow  in  private  endeavor  what  German  railways  have 
done,  without  undue  or  unnecessary  governmental  restriction.  The 
German  railways  have  given  most  effective  aid  in  the  development  of 
that  country’s  great  international  traffic.  They  have  applied  special  rates  on 
export  traffic  lower  than  on  domestic  traffic,  and  again  special  rates  lower 
on  export  traffic  to  German  ports  than  on  that  passing  into  or  through 
other  countries  by  rail.  In  their  rates  to  German  ports  for  export  they 
make  distinctions  between  traffic  destined  to  different  countries.  That 
is  to  say,  they  make  distinctions  in  their  charges  to  meet  the  necessities 
of  competition,  differing  in  degree  as  to  different  territories  of  destina- 
tion, just  as  the  merchant  must  vary  his  profits  to  meet  the  varying  com- 
petition found  whenever  he  attempts  to  extend  his  trade  beyond  local 
boundaries.  Our  railroads  in  the  United  States  must  do  these  things  if 
our  people  are  to  enter  broadly  into  competition  with  other  countries  for 
a world-wide  trade.  And  they  are  ready  and  willing  to  do  so,  if  they  do 
not  thereby  endanger  the  entire  fabric  of  the  domestic  rates  on  which 
they  must  depend  for  bread  and  butter,  if  not  for  jam.  To  state  this 
again  practically  and  not  theoretically,  the  railroads  of  the  United  States 
must  be  allowed  to  do  these  things  without  being  charged  with,  and 
penalized  for,  discrimination  against  domestic  traffic.  Such  a proposal 
requires  3.  broad  vision  by  regulating  authority,  but  it  has  well  rooted 
precedents.  Even  the  Declaration  of  Independence  does  not  claim  more 
than  that  all  men  were  created  equal,  and  even  Thomas  Jefferson  recog- 
nized that  domestic  commerce  and  foreign  commerce  were  two  separate 
and  distinct  functions  governed  by  different  laws,  even  when  carried  on 
by  the  same  individual. 

While  there  has  been  some  just  criticism  in  recent  years  of  the 
rigidity  of  the  export  rates  of  American  railroads  in  the  face  of  suddenly 
developing  requirements  and  opportunities,  such  as  will  always  be  charac- 
teristic of  export  trade,  it  has  been  generally  recognized  that  that  rigidity 
has  been  due  largely  to  the  process  of  adjustment  of  railroad  practice  to 
the  steadily  heavier  hand  of  public  regulation.  In  this  process  the  indirect 
influences  have  been  as  potent  as  the  direct;  for  while  regulation  has 


8 


never  attempted  to  prescribe  a general  relation  between  export  and  do- 
mestic rates  the  existence  of  low  export  rates  has  been  a constant  menace 
in  attacks  upon  the  reasonableness  of  domestic  rates.  Nevertheless  when 
all  is  said  on  this  subject  it  remains  a fact  that  the  railways  of  the  United 
States  have  not  been  less  effective  than  those  of  Germany  or  of  any  other 
country  in  regard  to  service  or  charges.  We  haul  export  grain  900  miles 
for  2.74  mills  per  ton  per  mile,  and  coal  is  carried  to  tidewater  for  less 
than  3 mills  per  ton  per  mile.  Our  rates  generally  on  export  traffic  are 
cheaper,  service  considered,  than  are  the  rates  of  either  the  German  or 
English  railways.  It  can  never  be  fairly  said  that  in  the  past  the  railroads 
of  the  United  States  have  failed  to  do  their  part  in  the  development  of 
the  export  traffic  which  the  United  States  has  heretofore  produced. 

With  this  claim  it  may  be  admitted  that  looking  ahead  and  not  behind, 
changes  of  methods  on  the  part  of  the  railroads  as  on  the  part  of  our 
manufacturers  may  be  necessary  to  give  the  largest  effect  to  our  present 
opportunity  for  a really  great  foreign  trade.  At  the  moment  what  seems 
most  necessary  is  a full  understanding  of  what  is  required  of  all  con- 
cerned to  meet  national  competition  as  we  shall  find  it.  It  is  a demand 
that  we  shall  think  in  larger  terms  than  has  been  our  wont.  The  prepa- 
ration of  that  understanding  is  now  going  on,  too  slowly  it  seems  to  some 
who  have  vision  to  see  the  goal,  but  still  it  is  going  on.  Great  strides  have 
been  made  in  the  last  year,  and  many  new,  and  with  us  unprecedented, 
things  have  been  done.  The  National  Foreign  Trade  Council  has  been  a 
large  factor  in  this  patriotic  stimulus  of  progress.  Some  of  the  rail- 
ways also  have  done  some  of  these  things,  but  speaking  of  the  problem  as 
a whole,  and  of  the  railways  as  a part  of  it,  it  may  be  said  that  the  rail- 
ways are  managed  by  men  who  are  alert  to  change  their  methods  when 
advantage  of  change  is  even  darkly  hinted;  and  that  they  may  be  ex- 
pected to  do  their  part  in  whatever  is  really  necessary. 

Nor  is  there  any  reason  to  assume  that  regulating  authority  can  not 
or  will  not  agree  that  the  railroads  may  do  whatever  is  shown  to  be  sound 
and  best  for  the  nation  as  a whole,  for  have  we  not  witnessed  the  spec- 
tacle of  a political  body  revealing  at  once  vision  and  courage  by  agreeing, 
in  the  face  of  a deep-rooted  selfishness  and  a clamor  of  popular  prejudice, 
to  advances  in  domestic  railroad  rates  which  had  been  proven  to  be  neces- 
sary if  our  railroads  are  to  continue  to  be  true  commercial  arteries.  If  reg- 
ulating authority  shall  take  the  broad  view  of  the  relation  of  the  American 
railroads  to  foreign  trade  which  has  been  demonstrated  to  be  successful  in 
other  lands,  and  those  who  by  actual  experience  are  expert  in  foreign  trade 
shall  indicate,  frankly  and  without  too  much  individual  selfishness,  the 
requirements  of  each  situation  as  it  shall  arise,  I venture  to  say  that  the 
railways  of  this  country  may  be  relied  upon  to  do  their  utmost,  perhaps 
more  than  their  rightful  share,  in  co-operative  effort  to  take  full  advan- 
tage of  our  immediate  national  opportunity. 

It  has  already  been  demonstrated  that  the  railroads  may  aid  ef- 


9 


fectively  in  the  development  of  foreign  commerce  by  co-operation  with 
the  producing  communities  and  the  seaports  which  they  serve.  It  is  not 
only  impracticable,  but  it  would  manifestly  be  improper,  for  a railroad 
to  act  as  a selling  agency  in  foreign  markets  for  individual  merchants 
and  manufacturers,  as  has  been  ingenuously  proposed  by  some;  but  the 
railroad  may  properly  gather  and  make  available  to  all  shippers  in  a 
position  to  use  its  facilities  information  as  to  foreign  markets,  as  to 
customs  laws  and  port  regulations,  as  to  methods  of  packing  and  shipping 
and  as  to  all  other  matters  that  may  be  helpful  in  building  up  export 
business.  It  may,  with  equal  propriety,  advise  merchants  in  other  coun- 
tries where  and  from  whom  in  the  territory  served  by  it  they  may  buy 
such  commodities  as  they  want.  It  is  service  such  as  this  that  Southern 
Railway  Company  and  the  companies  associated  with  it  have  undertaken 
to  perform  with  respect  to  trade  with  the  countries  of  South  and  Central 
America  and,  to  some  extent,  with  other  foreign  countries,  through  their 
South  American  Agency,  through  Foreign  Freight  Agents  at  New 
Orleans  and  Mobile,  and  through  freight  traffic  agents  at  other  seaports. 
I am  glad  to  be  able  to  report  that  this  special  service  is  now  beginning 
to  show  real  results  and  to  justify  the  experiment. 


